Tuesday, June 06, 2006

IBM triples investment in India’s emerging economy

IBM plans to triple its investment in India to approximately $US 6 billion over the next three years; the change of plans displays IBM’s seriousness over the opportunity in India’s information technology sector: “I am not going to miss the [India] opportunity,” said Sam Palmisano, IBM’s CEO.

The large investment amount far exceeds that recently announced by a trio of fellow US computer products companies: Microsoft, Intel and Cisco plan to invest a combined $3.9 billion in India.

The increase in demand for IT services stems from the expansion of and access to internet connectivity across the country—as well as strengthening competition from India based IT companies.

IBM is India’s largest multinational firm, with 43,000 staff in 14 cities—compared to 4,900 just four years ago. And the growth of the company’s presence is likely to continue as 21 million college graduates, many trained in computer related skills, will enter the Indian workforce by the end of the decade; the software services sector is likely itself to grow by 25% within the next year.

Last year, IBM hired 15,500 staff in India while shedding roughly 10,000 in Europe. Such investment can only be positive for India, coupled with its approximately 8% annual GDP growth. However, the country's economy is still at risk from the volatility of private capital markets (see Private capital flows - CIFD Post)

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